Bangladesh's export to the SAARC nations has been rising year on year, and it has swelled by 88 per cent in the last five years, analysts said on Friday.
The growth of Bangladeshi products' shipment to the eight-nation sub-regional block is much higher than the country's overall export earning growth from across the globe, they said.
Economists and businessmen said duty-free access to India has prompted Bangladesh's export income from the South Asian (SA) nations over the last few years.
Besides, some product diversification in the country's export basket, facilitated by local incentive provisions, also helped the expansion of the country's foreign trade to the bloc of neighbours.
According to the Export Promotion Bureau (EPB), Bangladesh's export to the SAARC nations ballooned to US$1.49 billion in the last fiscal year (FY), 2020-21, up by 88.03 per cent than $797.69 million five years back in FY 2016.
During the same period, the country's export earnings from foreign trade posted a 13.14 per cent growth to $38.76 billion in FY 2021 from $34.26 billion in FY 2016.
The FE analysis has found that the shipment of Bangladeshi products to Afghanistan, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka has maintained a steep rise over the last five years, except in a single year - FY 2020.
The export earnings from the SAARC nations were $797.69 million in FY 2016, which rose to $835.61 million in FY 2017.
In FY 2018, the export earnings from the SA nations crossed the billion-dollar mark and reached $1.05 billion in FY 2018 and $1.41 billion in FY2019.
However, the earnings dropped year-on-year in FY 2020 to $1.24 billion due to the coronavirus pandemic impact.
The earnings revived in FY 2021, and the country earned $1.49 billion foreign exchange, the EPB data showed.
Among the SA markets, India is the main destination of Bangladeshi products, followed by Pakistan, Nepal and Sri Lanka.
India's import of Bangladeshi goods crossed the $1.0-billion mark for the first time in FY 2019. Bangladesh exported goods worth $1.28 billion to India in FY 2021, the EPB data showed.
As a Least Developed Country (LDC), Bangladesh is enjoying duty-free quota-free (DFQF) access for nearly 94.1 per cent of its export items, except meat and dairy products, vegetables, coffee, tobacco, and iron, steel and copper products, etc.
Mohammad Hatem, Managing Director of MB Knit Fashion Ltd and also Vice President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told the FE that market access to India following the ease of non-tariff and para-tariff barriers facilitated export to that country over the last few years.
Before opening up of the market, Bangladesh's export earnings to India were about half of the amount than the earnings in the past fiscal, he added.
The EPB data also showed that Bangladesh made the shipment of different goods worth $82.71 million to Pakistan, $68.66 million to Nepal, and $47.32 million to Sri Lanka in FY 2021.
Besides, it also exported goods worth $8.64 million to Afghanistan, $6.89 million to Bhutan, and $6.02 million to the Maldives in the just-concluded fiscal.
Among the export items, the apparel sector was the dominant one, which earned more than $500 million from Indian market alone.
Besides, Bangladesh also exported vegetables, textile fibre and paper yarn, animal and vegetable fats, jute and jute goods, leather and leather goods, processed agro-foods, furniture, drugs and ceramic products etc to the SA nations.
Along with the duty-free market access, the government's incentives for non-traditional market access, production cost rise in India due to implementation of Goods and Services Tax (GST), and presence of global retailers in India were the factors behind the sharp rise of Bangladesh's exports, analysts said.
Currently, the government is providing a 4.0 per cent cash incentive against the export of apparel goods to non-traditional destinations.
"Bangladesh is offering apparel goods at reasonable prices. Besides, global retailers are opening more outlets in India, who are buying products from here. Production cost in India increased due to the implementation of GST there," said Mr Hatem.
As a result, demand for Bangladeshi goods increased in that country, which pushed up local export earnings.
Besides, transportation cost from Bangladesh was low, which encouraged Indian importers to buy goods for both local brands as well as foreign brands, he added.
Dr Khondaker Golam Moazzem, Research Director of Centre for Policy Dialogue (CPD), told the FE that the export growth was good news for Bangladesh. But the country still had more potential to expand its shipments to the SAARC countries.
"Bilateral factors rather than multi-lateral or regional initiatives have mainly prompted export within the SA nations."
If Bangladesh could work to expedite the SAARC motor vehicles agreement (MVA), BBIN, and SAARC and SATA negotiations, the country's shipments would have expanded manifold, as this sub-region is the home of nearly 2.0 billion people.
Work for removal of non-tariff and para-tariff barriers, and establishing common standard certification procedure of the products within the region would enhance trade in the SAARC countries, he opined.